A HELOC usually starts cheaper, but its rate moves with the prime rate and your home is the collateral. A personal loan costs more but never changes. Here is the math on $30,000.
By the CalcLedger editorial team · Updated September 2026 · 5 min read · Examples use illustrative rates · How we calculate
If you need $30,000 for a renovation, a large bill or to pay off cards, the two most common options are a personal loan and a home equity line of credit (HELOC). The right choice depends less on today's rate than on two questions: can you handle a payment that changes, and are you willing to put your home on the line?
| Personal loan | HELOC | |
|---|---|---|
| Rate | Usually fixed | Usually variable (prime + a margin) |
| Collateral | Usually none | Your home |
| How you get the money | One lump sum | Draw as needed up to a limit |
| Payment | Same every month | Can change; may be interest-only while you draw |
| Typical costs | Possible origination fee | Possible closing costs and annual fees |
| Time to fund | Often days | Often weeks (appraisal, title) |
As the CFPB puts it, HELOCs "usually have a variable interest rate, so your payments may change from month to month." You can borrow during a "draw period," then enter a "repayment period." And because the loan is secured by your home, "if you fall behind or can't repay the loan on schedule, you could lose your home."
Here are illustrative rates: a personal loan at 12% fixed, and a HELOC at the bank prime loan rate of 7.00% plus a 1-point margin, or 8%. Both are repaid over 5 years.
| Option | Monthly payment | Total interest |
|---|---|---|
| Personal loan, 12% fixed | $667 | $10,040 |
| HELOC at 8%, rate stays the same | $608 | $6,498 |
| HELOC, 8% then 9% (year 2) then 10% (years 3–5) | $608 rising to $629 | $7,390 |
| HELOC at 10% the whole time | $637 | $8,245 |
Total interest on $30,000 over 5 years
Illustrative rates; HELOC payment recalculated when its rate changes
In these examples, the HELOC stays cheaper even if its rate rises two points. The trade-off is certainty: the personal loan payment is the same on day one and month 60, while the HELOC payment moves with prime.
Watch the origination fee: it raises your APR. See how origination fees work and run your offer in the personal loan calculator.
Check how much you could borrow and what it would cost in the HELOC calculator, and compare it with a fixed home equity loan or a cash-out refinance in HELOC vs. home equity loan vs. cash-out refi.
Is a HELOC cheaper than a personal loan?
Usually the starting rate is lower because your home secures it. But its rate is typically variable, it can have closing costs, and your payment can rise. Compare total cost under a few rate scenarios.
Do HELOC rates go up when the Fed raises rates?
Most HELOCs are tied to the prime rate, which usually moves with the Fed's target. After the September 2026 hike, prime rose to 7.00%, so many HELOC rates rose by a quarter point.
Can I get a fixed rate on a HELOC?
Some lenders let you convert part of the balance to a fixed rate, sometimes for a fee. A home equity loan is another fixed-rate option secured by your home.
Which is better for debt consolidation?
A fixed-rate personal loan keeps the risk away from your home. A HELOC can cost less, but only if you stop adding to the old debt and can handle a payment that may rise.
Rates in this guide are illustrative. Your rate depends on your credit, income, home equity and lender.
Rules, limits and program details are checked against these official sources. Example numbers are calculated by CalcLedger with the formulas on our how we calculate page. Read our editorial policy.